140. Clauses 15 and 16 apply to the Security Service,
the Secret Intelligence Service and the Government Communications
Headquarters (GCHQ)referred to collectively as "the
intelligence agencies". Clause 15 effectively exempts the
intelligence agencies from being charged with committing a corruption
offence, provided that they are operating under the authority
of an authorisation given by the Secretary of State at the time
of the apparent offence. The Secretary of State may authorise
the intelligence agencies to carry out an act which would otherwise
constitute a corruption offence only if he or she is satisfied
that the three conditions set out in sub-Clauses (4) to (6) of
Clause 15 have first been met. However, even if the intelligence
agencies were to act in accordance with an authorisation which
the Secretary of State should not have givenbecause one
or more of the three conditions had not, as a matter of fact,
been metit would appear that the agencies would still be
exempt from being charged with a corruption offence.

141. We have heard a range of evidence as to the
desirability of the current broad scope of the Clause 15 exemption.
The chairpersons of the bodies responsible for monitoring the
implementation of the OECD convention and the Council of Europe's
criminal law convention separately told us that Clause 15 is not
in compliance with the UK's obligations under either convention.[158]
Professor Pieth, the chairman of the OECD Working Group on Bribery
in International Business Transactions stated in oral evidence
that:

"Clause 15 is being explicit and just asking
for trouble. There you will be in massive trouble with the intelligence
agencies. That is going to trigger off huge debates internationally
"[159]

142. Mr Drago Kos, the chairman of GRECO, the body
responsible for monitoring the implementation of the Council of
Europe convention, told us that:

"No international treaty would allow an exemption
from the general criminalisation of corruption like the one included
in [Clause 15]. Even admitting the "special" or "unusual"
nature of the activities of the intelligence services and the
strict conditions laid down in [Clauses 15 and 16], there is no
doubt that the text of the draft is not in compliance with the
Council of Europe's Criminal Law Convention on Corruption or with
the OECD Convention [Clauses 15 and 16 are] in direct opposition
to international legal instruments in the field of corruption
and might attract heavy and undeserved criticism towards the whole
draft [Bill]. There is hardly any reasonable legal explanation
for the text of [Clauses 15 and 16]".[160]

143. On the other hand, we have also heard evidence
supporting the inclusion of Clause 15 in the Bill in its present
form. The Intelligence and Security Committee has stated that
Clauses 15 and 16 are necessary to ensure that, when the intelligence
agencies conduct activities that would otherwise be illegal in
the UK, they do so with the authorisation of the responsible Secretary
of State.[161]
The Attorney General told us that the intelligence agencies:

" are required from time to time to act
in a way which would contravene what the law is in order to protect
national security and to protect the people of the country. I
think it is much more desirable that that should be within a framework
within which Parliament has authorised with checks and balances
and set out clearly rather than leaving it to the discretion of
the prosecutor at the end of the day simply to say whether it
was appropriate or not".[162]

144. We consider further below the question of whether
the scope of the Clause 15 exemption is such that Clause 15 is
not in compliance with the UK's obligations under either convention.

145. In order to understand the application of Clause
15, it is necessary to consider the statutory functions of the
intelligence agencies, and the purposes for which those functions
may be exercised. This is because Clause 15(4) requires that the
act or omission that is authorised (or the operation in the course
of which such acts or omissions will be done or made) must be
necessary for the proper discharge of a function of the intelligence
agencies.

146. The statutory functions of these agencies are
set out in detail in Annex 3. In summary, on the basis of the
relevant legislative provisions, it would appear that all three
intelligence agencies are empowered to carry out their respective
functions only:

· in the
interests of national security, or

· in order
to prevent or detect serious crime, or

· (in
the case of the Security Service) "to safeguard" the
economic well-being of the UK; or (in the case of the Intelligence
Service and the GCHQ) "in the interests of" the economic
well-being of the UK.

147. Neither the OECD convention nor the Council
of Europe's criminal law convention expressly provide for intelligence
agencies to be exempted from the corruption offences that parties
to the conventions are required to establish. On the face of it,
therefore, the intelligence agencies are required to be subject
to the provisions of the conventions, unless there is some basis
for arguing that there is an implied exception.

148. In establishing whether there is such a basis,
it is necessary to consider what the objectives of each convention
are. While we do not propose here to undertake an extensive examination
of the objectives of each convention, we have commented briefly
on each.

149. The preamble to each convention is helpful in
establishing each convention's objectives. The preamble to the
OECD convention indicates that it is directed against bribery
because bribery "raises serious moral and political concerns,
undermines good governance and economic development and distorts
international competitive conditions". The preamble to the
Council of Europe's criminal law convention indicates that it
is directed against corruption because "corruption threatens
the rule of law, democracy and human rights, undermines good governance,
fairness and social justice, distorts competition, hinders economic
development and endangers the stability of democratic institutions
and the moral foundations of society".

150. This suggests that the objectives of both conventions
are essentially threefold:

· to safeguard
fundamental features of democratic societies, such as the rule
of law and human rights, and the stability of democratic institutions

· to promote
economic development and international competition

· to address
the "immorality" of corruption.

151. Any exception implied in the conventions must
be compatible with these objectives. Consequently, in order to
answer the concerns raised by Mr Kos and Professor Pieth, the
Government must be able to demonstrate that the exemption given
to the intelligence agencies under Clause 15 does not conflict
with these objectives. Professor Pieth acknowledged that all international
conventions arguably contain an implicit exemption in respect
of actions safeguarding national security.[163]
However, he questioned whether Clause 15 could not be limited
to providing an exemption for "defence and public security
in a very narrow sense"a sense that would "exclude
economic considerations".[164]
He suggested that, if Clause 15 did not exclude such "economic
considerations", it would risk non-compliance with the OECD
convention". He told us:

"My uneasiness is [that] we are here talking
in an economic context and we all know that secret services have
been heavily involved in economic espionage. It would certainly
be against the Convention to allow a secret service agency, for
the purpose of furthering business, to use such an exemption.
That is where we would really be very concerned".[165]

152. We have serious concerns that the breadth of
the Clause 15 exemption for intelligence agencies is such that
Clause 15 risks non-compliance with the UK's obligations under
the OECD convention and the Council of Europe's criminal law convention.
It seems to us that the Clause 15 exemption is compatible with
international law in so far as it promotes two of the three purposes
for which the intelligence agencies may exercise their functions,
national security and the prevention and detection of serious
crime. We are concerned, however, about the proposal to extend
the Clause 15 exemption to functions exercised for the third purpose:
acts or omissions of the Security Service intended to safeguard
the economic well-being of the UK and, even more broadly, to acts
or omissions of the Intelligence Service or the GCHQ done or made
in the interests of the economic well-being of the UK. For the
following reasons, we consider that drawing the Clause 15 exemption
so broadly as to include these cases would appear to risk placing
the UK in breach of its international obligations:

a) Article 5 of the OECD convention provides that
the investigation and prosecution of offences under the convention
"shall not be influenced by considerations of national economic
interest or the identity of the natural or legal persons
involved." As presently drafted, Clause 15 would appear to
be in direct contravention of article 5.

b) Giving the intelligence agencies licence to commit
corruption offences in the interests of the economic well-being
of the UK would appear to undermine the objectives of the OECD
convention and the Council of Europe's criminal law convention.
A very wide range of corrupt activities could fall under the umbrella
of safeguarding or promoting the UK's economic well-being; such
activities, of their nature, risk undermining other democratic
societies or compromising economic development and international
competition. Likewise, such activities would risk appearing immoral
in the eyes of the international community. Very few, if any,
of these activities would be sufficiently vital to justify that
risk.

153. For these reasons, we recommend that
the Government gives further consideration to the question of
whether the Clause 15 exemption for intelligence agencies is so
wide that Clause 15 risks non-compliance with the UK's international
obligations.

154. We also recommend that the Government
considers whether Clause 15 should be amended so that the exemption
for activities of the intelligence agencies applies only to acts
or omissions done or made in the interests of national security
or of preventing or detecting serious crime.